Two members of the House Committee on Government Reform have asked the General Accounting Office to investigate how many federal agencies have contracted with firms that have violated federal labor, antitrust, environmental and tax laws.
Reps. Tom Davis, R-Va., and Stephen Horn, R-Ca., sent a June 12 letter to the GAO requesting the investigation upon hearing that the Clinton administration plans to reintroduce last year's failed proposal that would have prevented companies that violated federal laws from being awarded federal contracts.
Under the proposal, if a contracting officer finds there is "persuasive evidence of substantial noncompliance with a law or regulation," a company will not be considered for a federal contract.
"Basically we just want to assess the merits of the proposed changes in the regulations and find out the extent of the problem, if there is a problem," said Bonnie Heald, spokeswoman for the House Government Management, Information and Technology Subcommittee.
The proposal infuriated the business community when it was introduced last July. Firms in the high-tech industry and other sectors banded together to form a coalition, the National Alliance Against Blacklisting, to lobby against the proposal.
The group charged that the proposal's language put too much power and responsibility in the hands of government contracting officers. High-tech companies contend those officers may not be equipped to determine whether there is "persuasive" or "substantial" evidence. They also fear that competitors could make the procurement process too political.
John Palafoutas, senior vice president for domestic policy at the American Electronics Association, holds up Microsoft as a prime example of a high-tech firm that would be hurt by these modifications.
"Microsoft has a lot of government contracts," Palafoutas said. "One of their competitors could say 'Well, they have an antitrust suit against them' and under these new blacklisting regulations, they could be disqualified."
Palafoutas added that minor violations of the Occupational Safety and Health Act are common in many industries and could be used as leverage by competitors. For example, failure by a company to submit paperwork on time.
High-tech firms could be especially at risk under the new rules. The federal government is the largest single purchaser of high-tech goods and services, and industry leaders fear the potential loss of federal contracts could be devastating to some.
The proposed modifications followed a 1997 statement Vice President Al Gore made to the AFL-CIO stating he would seek to change the Federal Acquisition Regulations.
"We call these changes the 'Blacklisting Regulations,'" Palafoutas said, "We believe they are Draconian to say the least."